Hu Gets Full State Honors as Visit Displays Obama's Dueling Views of China

President Barack Obama often portrays China as an economic bogeyman. With Chinese leader Hu Jintao in Washington, the U.S. president will pivot, emphasizing China as a partner and marketplace.

Hu arrived in Washington today for his first state visit to the U.S. with Chinese executives, including those from auto- parts maker Wanxiang America Corp. Before he leaves the U.S., he will be guest of honor at a formal White House dinner, tour a Chinese factory near Chicago and meet with U.S. business leaders from companies such as Boeing Co. and General Electric Co. Tonight he has a private dinner at the White House with Obama and top aides.

The itinerary, which has a business focus much like Obama’s trip to India in November, is an illustration of the importance both countries place on their economic relationship and meshes with the U.S. president’s goals of boosting exports and spurring job growth.

“Jobs equals trade equals China,” said Charles Freeman, a specialist in China studies at the Washington-based Center for Strategic and International Studies.

The economic relationship between the two countries, marked by more than $400 billion in annual trade, is complicated by disagreements on issues from human rights to China’s enforcement of intellectual property rights and what U.S. officials say is the artificially low value of China’s currency.

Photographer: Nelson Ching/Bloomberg

Chinese President Hu Jintao. Close

Chinese President Hu Jintao.

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Photographer: Nelson Ching/Bloomberg

Chinese President Hu Jintao.

Keep Pace

Obama and members of his administration have frequently pointed to the dual aspects of the U.S. stance toward China. During and after last year’s congressional campaign, Obama warned audiences that the U.S. must keep pace with China’s drive to modernize its infrastructure and education system, and develop alternative energy sources.

“They’re playing for first place and we need to play for first place,” he told Democratic Party donors at one fundraiser.

Treasury Secretary Timothy Geithner said last week that China “presents enormous opportunities for the United States and for the world.”

“But its size, the speed of its ascent and its policies are a growing source of concern both here and in countries around the world,” he said in a Jan. 12 speech in Washington.

The chief foreign policy advisers to both presidents laid out parallel themes for Hu’s visit: increasing interdependence on strategic and economic issues is inevitable and desirable.

“The historical trends of Sino-U.S. relations are irreversible,” Vice Foreign Minister Cui Tiankai told diplomats and reporters in Beijing Jan. 14. “China-U.S. cooperation is indeed indispensable to the solution of many global issues.”

Entwined Futures

Secretary of State Hillary Clinton struck a similar note in a speech later the same day in Washington.

“Our economies are entwined and so are our futures,” Clinton said. “A thriving America is good for China, and a thriving China is good for America.”

U.S. concerns have grown as China’s rising economic might put the economic relationship off balance; China had a $252 billion trade surplus with the U.S. in the first 11 months of 2010, according to Commerce Department data.

Commerce Secretary Gary Locke on Jan. 13 called the trade imbalance “not sustainable.”

“We need a more equitable commercial relationship,” he told the U.S.-China Business Council in one of a series of speeches on China last week by Obama officials. “The policies and practices that have shaped our relations over the past few decades will not suffice.”

Currency Differences

At the heart of the differences over trade is the value of China’s currency, the yuan, which administration officials and members of Congress say is undervalued and gives Chinese exports an unfair advantage by making them cheaper.

The yuan has climbed about 3 percent against the dollar since Chinese officials in June scrapped a peg which had been in place since the global financial crisis. Geithner told reporters Jan. 14 at the White House that China needs to let its currency appreciate “more rapidly.”

Even so, the administration is emphasizing with Hu’s trip the potential benefits of China’s growth. Obama will bring a group of U.S. executives from companies including Chicago-based Boeing, Fairfield, Connecticut-based GE and Motorola Solutions Inc., whose headquarters are in Schaumburg, Illinois, to talk about access to Chinese consumers and businesses.

Business Agreements

GE and American Electric Power Inc. were among the companies that signed agreements in Washington today to expand cooperation between China and the U.S. on alternative energy projects.

GE’s deal with China’s Huadian Corp. should result in the sale of 50 aero-derivative turbine generator sets to the Chinese company, generating $350 million in U.S. exports over a decade.

Columbus, Ohio-based AEP signed an agreement with China Huaneng Group, China’s biggest power producer, to work together to develop and evaluate carbon-capture technology.

“There’s this enormous appetite for being able to market products in China,” said Representative Randy Forbes, a Virginia Republican and the chairman of the Congressional China Caucus.

Chicago Stop

While Hu is in Chicago, U.S. and Chinese companies will announce about 40 agreements, the Chicago Council on Global Affairs said. Chinese and U.S. companies signed six agreements worth about $600 million in Texas during the visit of a delegation headed by Wang Chao, the deputy minister of commerce, Xinhua News Agency reported.

Also on the agenda for Obama and Hu are foreign policy issues such as the nuclear programs in North Korea and Iran, political tensions in Sudan and military ties between the U.S. and China. Obama also plans to raise China’s human rights record.

Michael Green, an Asia expert at CSIS, singled out the “awkward juxtaposition” of Obama hosting for a state visit the leader of a country that has imprisoned a Nobel Peace Prize laureate, Liu Xiaobo, who has been in a Chinese jail since last year on a charge of plotting to subvert the ruling Communist Party.

Managing Expectations

China analysts and administration officials said they don’t expect any breakthrough accords between the two nations.

“I have what I guess what I call modest expectations,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington. “Both sides are very heavily constrained politically what they can do to accommodate the other.”

More important may be the symbolism of the trip. The last state visit for a Chinese leader was when then-president Bill Clinton played host to President Jiang Zemin on Oct. 29, 1997. While former President George W. Bush met with Hu in the U.S., the session wasn’t accorded the status of a state visit. That trip was marred by a demonstrator who criticized persecution of the Falun Gong religious group at Hu’s welcome ceremony at the White House.

For Hu, in the last two years of his presidency, the full trappings of a state visit provide a measure of respect that will help bolster the relationship with the U.S., said Orville Schell, director of the Center on U.S.-China Relations at the Asia Society in New York.

China unveiled a 60-second promotional video on the giant screens of New York’s Times Square last night as the nation seeks to present a more positive image for the visit. The marketing film, featuring Chinese celebrities including basketball player Yao Ming, astronaut Yang Liwei, and pianist Lang Lang, will show 300 times a day on six screens, according to Xinhua.

Schell compared a state visit to a reaffirmation of marriage vows between a long-married couple.

“It’s not that the relationship is terrible,” he said. “It’s that it has a funny way of declining in between the re- declaration of vows that goes on at each presidential meeting.”

To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net; Hans Nichols in Washington at hnichols2@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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